Definitely try 1280x720p over dvi/HDMI, the deinterlacing in the dvdo should be alot better than the deinterlacing in your screen, sending it 1080i is not a good idea as your screen is still deinterlacing plus you are scaling in the scaler and then again in the screen.

Give 1280x720/59.94 a try and see how that looks.

No Darling, I've had it months!